A shadow treasury minister has written to Lord Green, trade minister, demanding
answers about HSBC’s money laundering problems in America and Mexico.

Pressure is growing on the trade minister, Lord Green, to give a public account of what knowledge he had and what action he took on money laundering failings within HSBC when he was chief executive and chairman.

Chris Leslie, the shadow Treasury minister, has written to Lord Green demanding answers about HSBC’s money laundering problems in America and Mexico which could leave the bank facing a $1bn (£640m) fine.

“As you will know, the US senate homeland security sub-committee on investigations last week reported on a series of significant alleged failings at HSBC Bank during your tenure as chief executive and chairman,” the letter says.

“As a senior Government minister with an ongoing role in banking policy, I would be grateful if you could place on the record – at the earliest opportunity – an assurance that you took every appropriate step if and when you became aware of the issues raised by this report.

“I am sure you will share my concern at the comment by Senator Carl Levin, who on Tuesday said: 'HSBC’s chief compliance officer and other senior executives in London knew what was going on but allowed the deceptive conduct to continue’.”

Although Mr Leslie said he was “confident” Lord Green could “answer all the questions”, his move maintains pressure on the minister. So far Downing Street has backed Lord Green, who has failed to give a statement to the House of Lords, which is still sitting, on the issue.

Investors have also demanded that HSBC repair the damage from the money-laundering scandal in the US because operating in America is central to its strategy, a major shareholder has warned.

The bank has become the latest British lender to come under fire after a Congressional report last week showed its failure to safeguard against money laundering exposed the US financial system to drug cartels and terrorists.

HSBC chief executive Stuart Gulliver is expected to try to reassure shareholders that the bank is remedying the problems when HSBC reports its first-half results on July 30.

In a memo to the bank’s employees last week, Mr Gulliver, who has led the bank since the start of 2011, insisted that “while we cannot undo past mistakes, we will be judged on how we respond to this issue and demonstrate that we have learnt from it”.

“When you have failings of control of this scale, it raises questions about corporate governance and risk control,” one large institutional fund manager told The Sunday Telegraph. “This is a big issue for the bank.”

The highly critical report from the senate committee accused HSBC of ignoring risks that some of its customers, including a Saudi Arabian bank, may have had links to terrorism. The 335-page report also found that HSBC’s Mexican bank moved $7bn in cash to its US arm between 2007 and 2008, a volume so large authorities became concerned it must have been drug money.

HSBC is now under intense pressure in the US to show that it will enforce and build on the changes it has made to its compliance procedures.